MEXICO CITY (B)--Mexico's biggest corn refining company, Arancia Corn Products, has temporarily halted operations at one of its four plants in an adjustment to the government's tight recent import policy on U.S. corn, an industry source said Thursday, June 28.

The plant, the company's smallest of two in the western city of Guadalajara, was idled about three weeks ago, according to the source.

"It was decided to close the plant because of the lack of inputs," the source said.

The other three plants are operating at about 70% of capacity, he said, adding that under normal circumstances all four plants run at 90-95% capacity.

Corn refining accounts for about one-third of Mexico's demand for U.S. corn. Arancia consumes about 60% of corn refiners' monthly intake of 200,000 tonnes of corn, the source said.

Mexico's government, which regulates access to U.S. corn through permits, has delayed giving a U.S. corn quota for the third quarter of 2001 because of problems marketing the country's key spring-summer corn harvest, in the northwestern state of Sinaloa.

Mexico's government, which regulates access to U.S. corn through permits, has delayed giving a U.S. corn quota for the third quarter of 2001 because of problems marketing the country's key spring-summer corn harvest, in the northwestern state of Sinaloa.

The government has tried to pressure end users--such as the corn refining, livestock, and tortilla sectors--into buying the domestic harvests by withholding permits.

It has been a difficult task. The theoretical cost, for example, of U.S. yellow corn placed in Guadalajara is 1,065 pesos (about $117) per tonne, according to one buyer.

But even with a direct government subsidy of 450 pesos per tonne, Sinaloa growers are still seeking 1,100 pesos per tonne from the market. Based on that price, domestic corn placed in Guadalajara would cost about 1,365 pesos.

Such a wide differential makes consumers reluctant to buy domestic corn, unless they absolutely have to.

The industry source added that due to "technical" properties of corn, it costs refiners about 15% more to make their products with white corn than with yellow. Mexico's domestic corn harvest is almost exclusively white.

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